Facts:

o February 15, 2001: Sps. Deo Agner and Maricon Agner executed PN without prior
notice or demand with Chattel Mortgage in favor of Citimotors, Inc. secured by a 2001
Mitsubishi Adventure Super Sport; and an interest of 6%/month for failure to pay each
installment. Citimotors assigned them to ABN AMRO Savings Bank, Inc. which assigned
them to BPI Family Savings Bank
o October 4, 2002: Due to failure to pay despite demand, BPI filed on an action for
Replevin and Damages in RTC of Manila
o RTC: issued writ of replevin but vehicle was not seized.
o RTC (trial on merits): ordered Sps. to jointly and severally pay the amount of
Php576,664.04 plus interest at the rate of 72%/annum
o CA: affirmed; MR denied

o HELD (petition for review on certiorari): denied; affirmed with modification lowering
interest to 1%/month
o The Civil Code in Art. 1169 provides that one incurs in delay or is in default from the
time the obligor demands the fulfillment of the obligation from the obligee. However, the
law expressly provides that demand is not necessary under certain circumstances, and
one of these circumstances is when the parties expressly waive demand. Hence, since
the co-signors expressly waived demand in the promissory notes, demand was
unnecessary for them to be in default
o Navarro v. Escobido: prior demand is NOT a condition precedent to an action for a
writ of replevin, since there is nothing in Section 2, Rule 60 of the Rules of Court that
requires the applicant to make a demand on the possessor of the property before an
action for a writ of replevin could be filed.
o Bank of the Philippine Islands v. Spouses Royeca: x x x The creditor's possession of
the evidence of debt is proof that the debt has not been discharged by payment. A
promissory note in the hands of the creditor is a proof of indebtedness rather than proof
of payment. In an action for replevin by a mortgagee, it is prima facie evidence that the
promissory note has not been paid. Likewise, an uncanceled mortgage in the possession
of the mortgagee gives rise to the presumption that the mortgage debt is unpaid.
o Elisco Case: The remedies provided for in Art. 1484 are alternative, not cumulative.
The exercise of one bars the exercise of the others. At the same time, it prayed for the
issuance of a writ of replevin or the delivery to it of the motor vehicle
o Compared with Elisco, the vehicle subject matter of this case was never recovered
and delivered to respondent despite the issuance of a writ of replevin. As there was no
seizure that transpired, it cannot be said that petitioners were deprived of the use and
enjoyment of the mortgaged vehicle or that respondent pursued, commenced or
concluded its actual foreclosure. The trial court, therefore, rightfully granted the
alternative prayer for sum of money, which is equivalent to the remedy of "exacting
fulfillment of the obligation." Certainly, there is no double recovery or unjust enrichment to
speak of.

Equitable interest rate. All the foregoing notwithstanding, We are of the opinion that
the interest of 6% per month should be equitably reduced to one percent (1%) per
month or twelve percent (12%) per annum, to be reckoned from May 16, 2002 until
full payment and with the remaining outstanding balance of their car loan as of May
15, 2002 as the base amount.

Settled is the principle which this Court has affirmed in a number of cases that
stipulated interest rates of three percent (3%) per month and higher are excessive,
iniquitous, unconscionable, and exorbitant. While Central Bank Circular No. 905-82,
which took effect on January 1, 1983, effectively removed the ceiling on interest rates
for both secured and unsecured loans, regardless of maturity, nothing in the said
circular could possibly be read as granting carte blanche authority to lenders to raise
interest rates to levels which would either enslave their borrowers or lead to a
hemorrhaging of their assets. Since the stipulation on the interest rate is void for
being contrary to morals, if not against the law, it is as if there was no express
contract on said interest rate; thus, the interest rate may be reduced as reason and
equity demand.